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3/4/1997, 12:00am

University's status as research institute scrutinized by NIH

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The "exceptional" rating the University received from the National Institutes of Health in August 1995 and the troubles caused by mismanagement of the ALG program have cast a shadow over research at the University. Not only do these incidents raise questions about the University's commitment to research, but also about how it can maintain its place as a world-class research institution.
Even though the two issues are often paired when discussed in the media, said Mark Brenner, vice president for research and dean of the graduate school, "the problems with ALG and the NIH are both the same and different. To say that the NIH rating is all about the ALG program is incorrect," he said.
ALG, or anti-lymphocyte globulin, is an anti-rejection drug developed by Dr. John Najarian during the 1970s and '80s in the surgery department of the Medical School. Gross mismanagement of funds was discovered in the program in 1992, and it was subsequently shut down.
Being rated exceptional might be good in other disciplines, but getting an exceptional rating from the NIH is something most research institutions try to avoid. To be an exceptional research institution means the NIH has found something out of the ordinary and the institution is deemed at risk for violating NIH regulations.
The University's problems with the NIH and ALG might not hurt University researchers financially, but could cause other hardships. Brenner said the University's current status hasn't hurt the institution's ability to get new research funds.
Vice President for Academic Affairs Marvin Marshak said he doesn't think the two cases have had much effect at all on the perception of the University's commitment to research. The University has worked hard to minimize the damages to the institution's reputation that could have been caused by the problems, he said. And it hasn't curbed the ability of University researchers to get grants from the NIH, Marshak added.
However, the slowdown caused by NIH-mandated special provisions for grant management might cause difficulty for the University in retaining and recruiting world-class research faculty, Brenner said.
When the University was rated exceptional, its expanded authority to oversee grants was withdrawn, Brenner said. So if researchers want to change their project's budget or carry a balance in a budget over to the next year, the University needs to get approval from the NIH. Generally, the NIH's decision is made within 30 days, but Brenner said he knows of numerous cases where it took anywhere from 60 to 150 days.
"To say that a lot of investigators have been slowed down is a euphemism," Brenner said. While the University is under sanction by the NIH, researchers are placed at a disadvantage. Furthermore, the school might have trouble attracting high-quality faculty, or excellent researchers might leave in frustration, he said.
The exceptional rating from the NIH didn't come from out of the blue. Brenner said the University was aware of grant-management problems before the NIH's ruling.
A report given in September 1996 by Brenner's office about the University's plan to fix problems with grant management revealed that a visit by the Food and Drug Administration in August 1992 raised awareness among administrators about problems in the ALG drug program. In November 1992, the University began its own investigation of the project.
The University's Department of Surgery discovered in fall 1993 that some research projects had been trading NIH funds -- a practice Brenner calls outright illegal.
Staff members who were working on one project were having hours billed to another project and vice versa, Brenner said. Sometimes the trades came out even, but oftentimes the practice led to missing money and poor budgeting.
The Grants Management Steering Committee was formed in summer 1994. They retained the A. Anderson consulting firm to audit the risks in grant management at the University.
Anderson released a report six months later that found that the University had a potential for serious problems and recommended the school take steps to strengthen its financial system and clarify policies. In response, the committee recommended five projects to address the concerns.
The misconduct investigations were completed in the surgery department by February 1995, and Dr. John Najarian resigned. He would later face, and be acquitted of, 21 counts of fraud, embezzlement and tax evasion.
Two months later, the University contacted the NIH and asked to talk about implementing their corrective action plan, Brenner said. A day or so later he said the NIH called back and would not communicate with the University because the Department of Justice was investigating the institution.
The NIH had no other contact with the University until Brenner got a call Aug. 14, 1995, telling him he would receive a letter in the mail naming the University as an exceptional institution and removing the University's expanded authorities.
The concerns that made the University an exceptional organization were some of the same ones mentioned in the Anderson audit. The University was already working to solve many of the issues.
The 1994 Grants Management Steering Committee had already instituted updates to the Regents' Code of Conduct Policy, further defined researchers' roles and responsibilities and recommended a staff training program and an electronic grants management system to replace the CUFS system that was riddled with problems. All were improvements that would have addressed the NIH's concerns, Brenner said.
"We had put in place one of the best systems and the NIH didn't know because of the blackout period where the two institutions weren't talking," Brenner said.
The NIH conduced a site visit in November 1995 and officials were expected to formalize a compliance agreement between the University and the NIH, thereby ending the exceptional status. However, Brenner said this never happened.
During the next eight months, two attempts to finalize an agreement fell through. Brenner was in Washington, D.C., in October and went to the NIH with the understanding that the agreement was ready to be signed. When he got there, he was told the agreement needed further review.
"It was then that I began to be suspicious that this was connected to other civil issues," Brenner said.
Those issues came to a head last December when the U.S. Department of Justice sued the University for fraud over its management of the ALG program. The government claims the University made about $35 million in illegal sales of the drug that was at the time experimental and not approved for sale.
The University and the NIH are close to an agreement, Brenner said. But the University is not content to wait for the agreement to be signed before fixing the problems it knows are there. "We've gone ahead and gotten things done," he said.
General Counsel Mark Rotenberg said he hopes the problems with the NIH can be solved. He said he is hopeful that the part of the suit involving how the University will manage NIH grant funds in the future can be settled out of court.
"We're about nine steps out of 10 to get that (resolved)," he said.
Rotenberg also said that he is hopeful the part of the suit demanding millions of dollars in payment for wrongdoing in the ALG program will be settled out of court.